House lawmakers on Thursday discussed how best to regulate digital assets, though some Democrats maintained there are already sufficient laws in place.
"It seems unnecessary to reinvent the rules when we already have a regulatory regime that is, indeed, effective," said ranking member Stephen F. Lynch, D-Mass., in his opening statement before the Digital Assets, Financial Technology and Inclusion Subcommittee.
"Despite what those across the aisle may say, we do not need to create an entirely new and special framework for crypto — we already have one," echoed Rep. Maxine Waters, D-Calif., who serves as the top Democrat on the House Financial Services Committee.
However, Subcommittee Chairman French Hill, R-Ark., said legislation is needed because "the SEC and the CFTC (Commodity Futures Trading Commission) have created an impossible situation where the same firms are subject to competing enforcement actions by the two different agencies."
"Absent legislation, our regulators are only pushing entrepreneurs, developers and job creators offshore out of the U.S. system." Mr. Hill said. "We have a responsibility to protect our constituents. There are glaring gaps in consumer and investor protections, and regulation by enforcement does nothing to fill that gap."
Other lawmakers expressed concern about pushing cryptocurrency firms offshore, including House Financial Services Committee Chairman Patrick McHenry, R-N.C.
"If Congress doesn't act, the rest of the world will," Mr. McHenry told the committee, pointing to the regulation, known as Markets in Crypto-Assets, that passed the European Parliament on April 20.
At the same time as the hearing in the House Financial Services subcommittee, a hearing under the same name with the same focus took place in the House Agriculture Committee's subcommittee covering digital assets.
Ahead of the hearings, Messrs. McHenry and Hill released a joint statement with House Agriculture Committee Chairman Glenn "GT" Thompson, R-Pa., and Commodity Markets, Digital Assets and Rural Development Subcommittee Chairman Dusty Johnson, R-S.D., explaining their efforts to achieve "much-needed regulatory clarity and certainty" for digital assets.
"Our committees are embarking on an unprecedented joint effort to pass and sign into law clear rules of the road for the digital asset ecosystem," the lawmakers wrote. "We must strike the appropriate balance to protect consumers without stifling responsible innovation."
The committee leaders said they plan to hold a joint subcommittee hearing on the issue next month.